STOCKS : Dow Fails to Move on Eve of Jobs Report
Blue chip stocks stalled dead in their tracks Thursday, while the broader market fell slightly as traders hesitated ahead of today’s government report on August employment.
The Dow Jones industrial average, which had fallen four consecutive sessions, closed unchanged from Wednesday’s 3,008.50.
On the New York Stock Exchange, declining issues outnumbered advances by about 6 to 5, and volume came to 162.38 million shares, up slightly from Wednesday’s 156.52 million.
John Brooks, a technical analyst at Davis, Mendel & Regenstein, noted that while the Dow average has held relatively steady, the broad market is showing considerable weakness. If today’s employment report is strong enough to preclude another drop in interest rates soon, traders expect that the market could be hit by a new round of profit-taking.
Among Thursday’s highlights:
* Food and beverage stocks, most of which have been hovering near 52-week highs, were sharply lower on new concerns about competition and price-cutting. Borden slumped 2 1/8 to 33 5/8, Kellogg lost 3 1/8 to 104 1/4, Campbell Soup dropped 1 3/4 to 80 1/4, Heinz fell 2 3/8 to 41, and Pepsico gave up 1 1/4 to 29 7/8. (Market Beat column, D3.)
* While food stocks lost ground, some industrial issues advanced on hopes for a strong economic rebound. Boeing rose 1 5/8 to 52 1/8, Nucor gained 1 5/8 to 84 1/4, and Quanex added 1 1/8 to 18 1/4. Nucor and Quanex are steelmakers.
* Retailers were mixed after most posted lackluster August sales. (Story, D1.) A big gainer was Southland-based Pic ‘N’ Save, up 1 3/4 to 18 7/8 on a sharp sales gain and a strong quarterly earnings report.
* Other Southland issues gaining on good earnings reports included HMO firm FHP International, up 1 to 18, and highway construction firm Kasler, up 3/4 to 11 3/8.
* Centocor jumped 5 to 45 1/2, continuing its ascent after its Centoxin drug was approved by regulators Wednesday. Other biotech stocks advancing included Genzyme, up 3 1/4 to 45; Amgen, up 1 3/4 to 158 1/2, and Cytogen, up 3/4 to 17.
* Occidental Petroleum eased 1/8 to 24 1/2 after trading as low as 23 1/2 in the wake of its decision to sell its 51% stake in beef processor IBP. IBP shares crumbled 3 to 16.
* Craig Corp., 50% owner or Stater Bros. supermarkets in the Inland Empire, slipped 1/2 to 15 3/4, and its preferred shares lost 3/8 to 12 5/8 after Britain’s BP Pension fund said it cut its stake in the preferred to 4.6% from 13.1%. It gave no reason.
Overseas, Tokyo stocks closed firmer in the heaviest volume since mid-June. The Nikkei average rose 96.96 points to 22,499.65.
In Frankfurt, the DAX average dipped 0.74 points to 1,647.17. In London, the FT-100 share average lost 1.3 points to 2,663.3.
Credit
Bond prices slipped after two Federal Reserve officials suggested that the central bank would not ease interest rates soon. The market expected little help from today’s jobless report.
The price of the Treasury’s 30-year bond fell 13/32 point, or about $4.06 per $1,000. Its yield, which moves in the opposite direction from price, rose to 8.09% from 8.06% Wednesday.
Federal Reserve Board Gov. John LaWare said at a conference he believed that the worst of the credit crunch had ended.
In an even more pointed comment on the direction of Fed policy, Robert Parry, head of the Fed’s San Francisco bank, said the recession was over. Parry also said an easing of inflation would likely be temporary.
Both comments appeared to make it less likely that the Fed will lower interest rates soon, despite lingering worries about the strength of the recovery.
Another negative for bonds was a report on the money supply that was stronger than expected. Monetary growth, if it continues, could boost the economy.
The federal funds rate, the interest on overnight loans between banks, was at 5.63%, up from 5.50% Wednesday.
Currency
The dollar rose against most currencies in quiet foreign exchange dealings, as traders awaited the August employment report.
Few traders were willing to take substantial speculative positions in the currency markets pending release of the report.
The dollar closed in New York at 1.739 German marks, up from 1.737 Wednesday, and it rose to 135.70 Japanese yen from 135.50.
Commodities
Cattle futures prices surged--at one point hitting the daily trading limit--despite an abundant supply of animals being readied for slaughter.
The October cattle contract at the Chicago Mercantile Exchange settled 1.38 cents higher at 71.50 cents a pound. Earlier in the session it advanced the daily limit of 1.50 cents. September feeder cattle were 1.22 cents higher at 85.12 cents a pound, .
Elsewhere, energy futures were mostly lower on the New York Merc, with light sweet crude oil for delivery in October slipping 12 cents to $21.69 a barrel.
Precious metals futures declined on the New York Comex. Gold for delivery in October dropped $1.60 to $348.20 an ounce; December silver was 4.2 cents lower at $3.92.
Market Roundup, D8
